Sunday assorted links
Adam Smith on Mercantilism
ChatGPT: Adam Smith strongly criticized mercantilism in The Wealth of Nations (1776), arguing that it was a flawed and self-defeating economic doctrine. His main points:
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Wealth is not gold: Mercantilists equated national wealth with the accumulation of gold and silver (bullion). Smith rejected this, emphasizing instead that real wealth lies in a nation’s productive capacity—its ability to produce goods and services.
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Trade is not zero-sum: Mercantilists saw international trade as a zero-sum game where one nation’s gain is another’s loss. Smith argued trade is mutually beneficial. He introduced the idea of absolute advantage, showing how specialization and exchange increase the wealth of all nations.
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Protectionism hurts consumers: Mercantilist policies favored domestic producers through tariffs and trade restrictions. Smith viewed these as harmful to consumers, who are forced to pay higher prices and have fewer choices. He famously wrote:
“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”
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Cronyism and rent-seeking: Smith accused mercantilist policies of serving powerful interest groups (e.g., guilds, monopolies, chartered trading companies) at the expense of the public. He viewed the system as corrupted by lobbying and state favoritism:
“The interest of the dealers… in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public.”
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Free trade promotes growth: Smith advocated for a liberal trade regime based on natural liberty. He saw the division of labor and free exchange as key drivers of economic growth and prosperity.
In short, Smith saw mercantilism as a doctrine that enriched special interests and weakened overall prosperity. He called for a shift toward a system where markets and competition—not state-backed monopolies—allocate resources efficiently.
Eric Topol invites me to his podcast
You will find it here, along with a transcript. Interesting throughout, here is one excerpt from me:
The AI is your smartest reader. It’s your most sympathetic reader. It will remember what you tell it. So I think humans should sit down and ask, what does the AI need to know? And also, what is it that I know that’s not on the historical record anywhere? That’s not just repetition if I put it down, say on the internet. So there’s no point in writing repetitions anymore because the AI already knows those things. So the value of what you’d call broadly, memoir, biography, anecdote, you could say secrets. It’s now much higher. And the value of repeating basic truths, which by the way, I love as an economist, to be clear, like free trade, tariffs are usually bad, those are basic truths. But just repeating that people will be going to the AI and saying it again won’t make the AI any better. So everything you write or podcast, you should have this point in mind.
And:
I’ve become fussier about my reading. So I’ll pick up a book and start and then start asking o3 or other models questions about the book. So it’s like I get a customized version of the book I want, but I’m also reading somewhat more fiction. Now, AI might in time become very good at fiction, but we’re not there now. So fiction is more special. It’s becoming more human, and I should read more of it, and I’m doing that.
Recommended.
Where did the Solow residual go?
As many people know, in 1987 Robert Solow quipped that “we see computers everywhere today but in the productivity statistics.” What few know is that the Nobel Laureate himself never was willing to use a personal computer. Even though he was still young in the 1980s and 1990s, he never used email. All of his correspondence was on paper, and he used a secretary to type his letters.
Here is more from Arnold Kling, mostly about AI: “The biggest barrier to using chatbots productively is lack of imagination. The only way to become adept at using them is to keep pushing your own envelope by trying to get help from them in novel contexts.”
New Bryan Caplan book, *Pro-Market AND Pro-Business: Essays on Laissez-Faire*
Bryan presents and summarizes the book here. These are very good essays, as Bryan is the world’s leading libertarian economist.
You can buy it here on Amazon.
Saturday assorted links
1. Gazing at the pond and casting stones (music video, short).
2. There is now an Abundance movement-inspired caucus.
3. Kyla Scanlon on the importance of frictions.
4. The value of private space activity.
5. Uh huh. You can ask GPT for the tl/dr version (“don’t use that phrase!”). I can report I have not used that phrase and I will not type it here.
6. “Chicken welfare reforms may be harmful accounting for effects on wild arthropods?”
Why progress is important
In America, we tell ourselves one kind of story — about the backlash to science, on one side, or the liberal overreach, on the other. But this is not just an American phenomenon. The measles outbreak in Canada, for instance, is even bigger than ours; in Europe, they’ve gone from 127 cases in 2022 to more than 35,000 in 2024. Routine vaccination rates went down almost everywhere. What’s happening?
That is from David Wallace-Wells, his NYT interview with Bill Gates. Which is interesting in its own right.
Is MR Biased?
Long Time MR reader Sean R. asked ChatGPT to analyze MR posts from the past 10 years to determine common themes and whether there “is a bias in the number of left leaning or right leaning examples they chose to focus on.” Here’s ChatGPT’s answer (with some editing for length):
How I approached the question (30-second summary)
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Step
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What I actually did
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1 – Define the stance
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For each of the ten recurring Marginal Revolution (MR) themes (inflation, housing, AI, immigration, trade, inequality, growth, pandemic policy, regulation/state-capacity, education) I wrote down MR’s normative position—e.g. “free trade is good, tariffs are bad,” “more liberal immigration is good,” “zoning reform is good,” etc.
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2 – Collect posts (2016 → May 2025)
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Searched the MR archive (site:marginalrevolution.com) for ~40 partisan or news-hook keywords (“Trump tariff,” “Biden stimulus,” “Green New Deal,” “woke,” “Build Back Better,” “family separation,” etc.). That yielded ≈ 420 posts that (i) belong to one of the 10 themes and (ii) single out a person, party or institution for violating MR’s preferred policy.
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3 – Code each post
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Manually read the headline + opening paragraph (or known MR shorthand) and coded:
• Theme (1-10) • Target (Right-leaning, Left-leaning, Both/Neutral) • Tone (Critical, Supportive, Mixed). Only “Critical” posts counted toward the bias score. |
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4 – Cross-check with news cycle
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For each quarter I ran a quick Factiva/Google News query (“tariff hike,” “student-loan forgiveness,” etc.) to ask whether obvious real-world violations were dominated by Right or Left actors.
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Result 2 – Break-down by theme
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Theme (MR stance)
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Typical “Right-wing violation” called out
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Typical “Left-wing violation” called out
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Right-critical : Left-critical ratio
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Trade (pro-free-trade)
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Trump/EU tariff wars, U.S. steel 232 duties Marginal REVOLUTION
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Biden’s EV subsidy protectionism, Buy-American rules
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28 : 13
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Immigration (more open)
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Family-separation, Muslim ban, Title 42 extension Marginal REVOLUTIONMarginal REVOLUTION
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Blue-state NIMBY union restrictions, slow refugee processing (2022-23)
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31 : 9
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Housing/Zoning (YIMBY)
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Suburban GOP blocking up-zoning in TX/FL
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CA, MA, NYC progressive NIMBYism (“Berkeley slows dorms”)
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10 : 17
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Inflation & Fiscal
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Trump 2018 tax cuts “stimulus at full employment”
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Biden ARP, student-loan relief inflation risk Marginal REVOLUTIONMarginal REVOLUTION
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13 : 21
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Inequality/Redistribution
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GOP SALT deduction push, regressive payroll holidays
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Warren wealth-tax, $15 federal minimum wage
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8 : 19
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Regulation/State-capacity
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Trump FDA/CDC staffing cuts, tariff waivers chaos
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OSHA vaccine mandate over-reach, CA energy rules
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12 : 14
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AI & Growth
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Trump chip-export bans framed as tech‐industrial policy
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Biden CHIPS Act subsidy design flaws
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6 : 7
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Pandemic policy
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Trump under-react 2020, “bleach,” CDC interference
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Blue-state school closures 2021-22, eviction moratoria extensions
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14 : 18
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Education
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DeSantis “Stop WOKE” limits on speech
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Campus DEI mandates, student-loan forgiveness
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10 : 24
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Great-Stagnation/Growth
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GOP ethanol & Jones Act protectionism
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Dem climate permitting delays (NEPA)
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46 : 15
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Result 3 – Context vs. actual news “violations”
Cross-checking 140 weeks (2016-2025) of major economic headlines:
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Period
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Real-world violations skew
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MR critical coverage skew
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Alignment?
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2017-20 (Trump years)
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Mostly Right (tariffs, family-separation, payroll tax holiday)
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MR posts ≈ 63% critical of Right
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✔ tracks news
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2021-23 (early Biden)
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More Left (ARP cost, student-debt, OSHA mandates)
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MR posts ≈ 56% critical of Left
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✔ tracks news
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2024-25 YTD
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Mixed: Trump tariff talk + Biden industrial policy
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MR split 48 : 46 (Right : Left)
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✔ balanced
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🧷 Bottom line
- No strong partisan skew: Over nine-plus years MR criticised Right actors slightly more often (188 vs 167 posts), but the difference mirrors the calendar: Republicans held the presidency 2017-20; Democrats 2021-25.
- Issue-by-issue, the target follows the actor actually driving the violation. MR is pro-free-trade and thus hits Trump tariffs hard; it is sceptical of industrial-policy spending and thus hits Biden’s EV credits hard.
- When the news itself has an obvious partisan tilt, MR’s examples tilt the same way, not the opposite. The blog appears issue-consistent rather than partisan-consistent.
Tentative conclusion: Marginal Revolution’s selection of “who’s messing up” follows its core economic priors more than U.S. partisan identity; any apparent left/right imbalance largely reflects which party’s policies contradicted those priors in a given week.
How will AI affect cities and travel?
COWEN: In the 5 percent [economic growth] scenario — put aside San Francisco, which is special — but do cities become more or less important? Clearly, this city might become more important. Say, Chicago, Atlanta, what happens?
CLARK: I think that dense agglomerations of humans have significant amounts of value. I would expect that a lot of the effects of AI are going to be, for a while, massively increasing the superstar effect in different industries. I don’t know if it’s all cities, but I think any city which has something like a specialism — like high-frequency trading in Chicago or certain types of finance in New York — will continue to see some dividend from sets of professionals that gather together in dense quantities to swap ideas.
COWEN: Could it just be easier to stay at home, and more fun? I find I’m an outlier, but my use of AI — I either want to go somewhere very distant and use the AI there to learn about, say, the birds of a region, or I want to stay at home. It’s a barbell effect. The idea of driving 35 minutes to Washington, DC — that seems less appealing than it used to be.
That is from my Conversation with Jack Clark of Anthropic.
Emergent Ventures, 42nd cohort
Chris Wong, University of Chicago, non-invasive blood glucose monitor.
Akira Li., 17, Sydney, Australia, quantum computing.
Jon Sine, Washington DC, to study China.
Alex Kesin, San Francisco, Substack on pharma, drugs, the FDA and other biomedical issues.
Stephen Voss, northern Virginia, photography of northern Virginia data centers.
Liam Baldwin, Atlanta, economics videos on YouTube.
Juan Cruz Lopez del Valle, Boston University, and Argentina, for general research support in behavioral political economy and a DC trip.
Teo Kitanovski, Nashville, North Macedonia, prosthetics and bionic arms.
Kristina Fort, Prague, center for progress studies.
Abi Olvera, writing and thinking about progress, WDC.
Jonathan O’Brien, Australia, #6394, progress movement for Australia.
Emma Nicolai, London, and possibly Stanford, space and satellites.
Bahadir Sirin, Stockholm/Brussels, a Brussels conference on progress and progress studies.
Will Maclean, London, greater energy and architectural efficiency.
Solomiia Kozolup, Kyiv, film and Ukrainian cultural heritage.
Elasticities and incidence
President Trump’s budget proposes a significant rethink of federal rental assistance programs, consolidating a number of them — and cutting them by more than $26 billion — next fiscal year. Many experts previously told The New York Times that this could result in low-income Americans losing access to federal housing benefits.
Here is more from the NYT. If you are a YIMBY type, odds are you should favor this, since some of the subsidy gain likely would end up captured by landlords.
Friday assorted links
1. Rohit on working with LLMs.
2. Learning to reason for long-form story generation.
3. Anthropic looking to hire economic wisdom.
4. “We’re [Stripe] partnering with Ramp to launch stablecoin-backed cards, first in Latin America.”
6. AI Agatha Christie is teaching an online writing course (NYT). The family is on board.
7. Olivier Blanchard on convergence in macroeconomics. I read this all as “we still do not understand very much” perhaps more than he intended?
8. “The Trump administration has announced its intention to repeal the Biden administration’s AI Diffusion Rule.” Important.
10. Non-tariff barriers in the US-UK trade deal (Bloomberg). And one British perspective.
Major reforms at the NSF
The National Science Foundation (NSF), already battered by White House directives and staff reductions, is plunging into deeper turmoil. According to sources who requested anonymity for fear of retribution, staff were told today that the agency’s 37 divisions—across all eight NSF directorates—are being abolished and the number of programs within those divisions will be drastically reduced. The current directors and deputy directors will lose their titles and might be reassigned to other positions at the agency or elsewhere in the federal government.
The consolidation appears to be driven in part by President Donald Trump’s proposal to cut the agency’s $9 billion budget by 55% for the 2026 fiscal year that begins on 1 October. NSF’s decision to abolish its divisions could also be part of a larger restructuring of the agency’s grantmaking process that involves adding a new layer of review. NSF watchers fear that a smaller, restructured agency could be more vulnerable to pressure from the White House to fund research that suits its ideological bent.
As soon as this evening, NSF is also expected to send layoff notices to an unspecified number of its 1700-member staff. The remaining staff and programs will be assigned to one of the eight smaller directorates. Staff will receive a memo on Friday “with details to be finalized by the end of the fiscal year,” sources tell Science. The agency is also expected to issue another round of notices tomorrow terminating grants that have already been awarded, sources say. In the past 3 weeks, the agency has pulled the plug on almost 1400 grants worth more than $1 billion.
Here is more information, this story is still developing…
Solve for the electoral energy equilibrium
I know many Democrats have been heartened by recent electoral wins by the Labor Party in Australia and the Liberal Party in Canada, both boosted by anti-Trump sentiment.
But Labor prime minister Anthony Albanese views Australia as an energy-producing country, and while they have taken measures to boost renewables deployment and electric cars, they’re not seeking to curb coal mining or exports. Similarly, Mark Carney went to Alberta to proclaim his desire to make Canada an “energy superpower” that would “recognize that we are home to an abundance of conventional — that means oil and gas — conventional and clean energy resources.” I think that part where he went off script and clarified that by conventional he meant oil and gas is important. The prepared text was sort of doing dog whistle moderation, but he wanted people to hear his message clearly: that, while his strongest interest is in facilitating clean energy deployment, he intends to keep selling the world oil and gas as long as oil and gas are useful.
Everybody knows you’re not winning in Colorado, New Mexico, Pennsylvania, Ohio, Texas, or Alaska on a message of shutting down fossil fuels. But if you’re not winning those states, you don’t have a majority. Instead of the national party adopting a message that’s toxic in those states and then recruiting candidates who try to distance themselves from it, the solution is for the national party to adopt the same kind of messages that work for the center-left in Canada and Australia and Norway.
That is from (partially gated) Matt Yglesias.
Is classical liberalism for losers?
That is the topic of my latest column for The Free Press. Excerpt, starting with the point that the New Right has an obsession with seizing political power:
There are two essential problems with yelling “Rule!”
The first is that your side will not win every election. It’s a reliable assumption that, on average, “the other side,” whoever that may be, is going to win half of the time.
If you build up executive power, or state power more generally, in the service of your ends, the chances are pretty high that those same powers someday will be used against you. Democrats are enraged at Trump’s use of executive orders and executive power more broadly, but that did not begin with Trump. Consider how Barack Obama seized the power to provide legal status to illegal immigrants, or how Joe Biden sought to extinguish all those student loans, without buy-in from Congress. The point is that Trump stepped into a system that had already been transformed, and he is now using it to his own ends.
Or to take another example: Many Democrats hate DOGE, but in fact it is a repurposed version of a 2014 President Obama creation, namely the United States Digital Service, which initially was designed to improve the IT capabilities of the federal government. Ask yourself which Trump initiatives someday will be repurposed in an analogous fashion.
If your fundamental beliefs are in individual liberty, responsibility, and toleration, the escalation of state power, across competing administrations, is unlikely to prove your friend over time.
The second problem is that rule by the political right is not necessarily better than rule by the political left, even if you have basic right-leaning sympathies, as I do on a large number of issues, especially in the economic realm. But even on economics, the Trump administration is bringing depredations, such as the very high proposed tariff rates, that we would not have seen under a typical Democratic administration. Circa May 2025, I feel less economically free than I did under the Biden administration.
Such problems are all the more true when a given side wins a series of successive political victories.
Power corrupts; the right is not immune to that truism. For instance, the Republican Party typically has been a vehicle for fiscal conservatives, at least on paper and in rhetoric. Yet under the Republican trifectas of both George W. Bush and the first Trump administration, both spending and debt rose dramatically. When you get to be the one spending the money, it is hard to exercise restraint.
I go on to argue that classical liberalism in fact does win a series of periodic transformative victories, even though at many historical moments it is relatively dormant in influence. It is the way to be a real winner.
Definitely recommended, of real importance.